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Bally Club Closings Open Doors For Competitors in Those Areas

Chicago — Last month's closures of 26 Bally Total Fitness clubs as part of the Chicago-based company's bankruptcy reorganization created several opportunities for its rival clubs.

Wendy Yellin, spokesperson for 24 Hour Fitness, San Ramon, CA, says displaced Bally members can bring their membership card to any 24 Hour club and receive a free 14-day pass.

Gold's Gym, Irving, TX, also voiced a strong interest in helping displaced Bally members and has been exploring a variety of options, says spokesperson Dave Reiseman, who declined to give further details.

The markets most affected by the Bally closures were Dallas-Fort Worth, which lost six Bally clubs, and Houston, which lost three clubs. 24 Hour has more than 30 clubs in each of the Dallas and Houston areas. Gold's Gym, headquartered in the Dallas area, has eight Dallas-Fort Worth clubs and four Houston-area clubs, according to its Web site. Another company that could benefit from Bally's closings is Life Time Fitness, Chanhassen, MN, which has eight clubs in the Dallas area and five in the Houston area, according to its Web site.

The New York, Boston, Seattle, Indianapolis and Kansas City, MO, areas lost two Bally clubs each. The rest of the clubs that closed were in Atlanta; Chicago; Los Angeles; Cleveland; Portland, OR; Charlotte, NC; and Hartford, CT. Bally still has clubs in all those markets, including Dallas and Houston, says company spokesperson Larry Larsen.

“As part of the reorganization process, we evaluated all of our leases at current locations and tried to negotiate with our landlords to the terms of those leases,” Larsen says. “Where we couldn't come to terms, we are ending those leases.”

Members of clubs that closed received complimentary upgrades worth $250 that allows them to use any Bally club nationwide.

The 26 closed Bally clubs brings the total number of closings to 47 since Bally filed for bankruptcy in December. The first 21 clubs that closed after the filing were part of a review of Bally's real-estate portfolio, Larsen says. After the latest round of closings, Bally has about 300 remaining clubs.

Under Bally's restructuring plan filed last month, Bally's senior lenders, including J.P. Morgan Chase & Co. and Anchorage Advisors LLC, will provide financing and cut Bally's debt by at least $660 million. Secured lenders who are owed $242 million will get 94 percent of the reorganized company's equity.

JP Morgan and Anchorage Advisors, which are providing a $39 million loan to finance the restructuring, will essentially become the new owners of Bally, although sources say both companies could sell their stakes once they recoup their losses. A hearing was scheduled for July 15 in bankruptcy court. The agreement requires court approval by July 30 and plan confirmation by Sept. 15.

“Bally is poised to exit Chapter 11 later this summer, and our future looks extremely bright,” Bally CEO Michael Sheehan said in a statement sent to Club Industry's Fitness Business Pro. “The reorganized Bally will be a stronger, leaner organization with a healthy balance sheet. We are very excited about the opportunity for Bally to grow and enhance our brand from this point forward.”